To navigate in and around the coast of New Zealand, both the King Voyager and the Queen Spirit need to be fitted with a special propeller. For example, the special propeller allows the Queen Spirit to navigate in and around the narrow ports in Auckland and Wellington. The special propeller allows the King Voyager to navigate in and around Milford Sound (one of New Zealand’s most popular tourist attractions). According to an email from Beyonce, United Cruises has two idle special propellers currently stored in their Balmain premises. The two idle special propellers were purchased nine years ago for $3 million each, both special propellers are compatible with either the King Voyager and Queen Spirit cruise ships, and both propellers have been written off for tax purposes. Forecasts from the accounting department indicate that each special propeller will be worthless 10 years from today. According to the International Sea and Port Authority each special propeller currently has a market value of $1,440,000. 

According to the ATO, special propellers (as used in the King Voyager and Queen Spirit) have an effective life of 8 years.

How do you work out the cash flow at the start/ over the 10 year period for the propellers?

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Answer rating: 100% (QA)

ANS WER The cash flow at the start of the 10 year period for the prope llers is 3 000 000 The cash f... View the full answer